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Distributed Generation Program Background

This page reviewed April 22, 2010

Distributed Generation (DG) refers to replacing or supplementing electricity from
the grid with electrical generation sources that are located near the
place of use. Some examples of electrical generation technologies
are engines, turbines, fuel cells, and photovoltaic cells. Some
businesses choose to operate distributed generation technologies with
heat recovery systems that capture the heat generation technologies
with heat recovery systems that capture the heat produced from the
electrical generation process. This captured heat can then be
used to heat water, provide steam or space heating, or power a chiller
at the facility. Distributed generation can be used at various
types of businesses such as hospitals, schools, libraries, breweries,
utilities, and laundries.

Senate Bill (SB) 1298 (chaptered
in 2000) required the Air Resources Board (ARB or Board) to establish a
distributed generation certification program for electrical generation
technologies that are exempt from local air district permits. SB
1298 mandated that the ARB establish at least two levels of emission
standards for affected DG technologies. The law required that the
first set of standards be effective no later than January 1, 2003, and
reflect the best performance achieved in practice by existing DG
technologies that are exempt from district permits. The law also
required that, by the earliest practiable date, the standards be made
equivalent to the level determined by the ARB to be the best available
control technology (BACT) for permitted central station power plants in
California. The emission standards were to be expressed in pounds
per megawatt hour (lb/MW-hr) to reflect the efficiencies of various
electrical generation technologies.

Pursuant to SB 1298, the
Board adopted a DG Certification regulation in 2001. The ARB
staff proposed interim standards for 2003 and recommended that 2007 be
considered the earliest practicable date for DG applications to meet
central power plant emission standards. In addition to
establishing emission standards, the DG Certification regulation
included testing protocols, calculation procedures, and other specified
requirements that manufacturers must satisfy to certify DG technologies.

Generally,
microturbines up to 250 kilowatts (kW), engines less than 50 horsepower
(hp), and fuel cells are exempt from district permits. Although
small engines are exempt from district permits, most engines used in
distributed generation applications are larger and therefore require
district permits. Consequently, the regulation has so far only
affected fuel cells and microturbines.

There are currently
about 700 microturbines and fuel cells in California capable of
producing more than 41 MW of electricity. Of the 700 units, only
4% are fuel cells. Roughly half of the 700 units are certified
models using natural gas. Of the remaining, there are more than
100 units operating on natural gas that were purchased before the DG
Certification program became effective in local air districts.
Roughly 50 percent of the certified units using natural gas
operate with a heat recovery system. This is not surprising.
To be economically competitive with grid power, DG units using
natural gas should have a significant demand for the waste heat
generated for such processes as heating water or running an absorption
chiller.

Microturbines and fuel cells were just entering the
California market when the Board adopted the DG Certification
regulation in 2001. Because of uncertainties at the time
regarding the development and deployment of these DG technologies, the
ARB staff included in the regulation a requirement to conduct a program
and determine if revisions were warranted. Staff determined
revisions would be required and on October 19, 2006 presented its
revisions to the Board. The Board adopted staffs revisions and
they became effective on September 7, 2007.